While nonprofit hospital financial performance has been steady overall this year, the top performing hospitals have continued to shine while lower performing hospitals struggled, according to Kaufman Hall’s “National Hospital Flash Report.”
Kaufman Hall, a Vizient company, gathers data from 1,300 hospitals across the U.S. to measure profitability and financial performance monthly. The adjusted year-to-date operating margin for nonprofit hospitals was 2.9% in September, a slight increase over August. But the average margins ranged from -1.8% in the bottom quartile to 14.7% average for hospitals in the top quartile, according to the report.
“The gap between strong performers versus struggling hospitals continues to widen,” said Erik Swanson, managing director and data and analytics group leader with Kaufman Hall. “Patient volumes are increasing while margins hold steady.”
Operating margins varied regionally as well. In the West, hospitals reported a 12% drop in average operating margin year over year in September, compared to a 1% drop in the Midwest and 14% gain in the Northeast/Mid-Atlantic region. Hospitals in the Great Plains reported an 11% increase in operating margin and flat results in the South.
The size of the hospital also influenced financial performance. The largest and smallest hospitals reported average margin drops while hospitals with 26-499 beds on average reported growth:
0-25 beds: -4%
26-99 beds; 2%
100-199 beds: 5%
200-299 beds: 0.3%
300-499 beds: 7%
500+ beds: -3%
“Hospitals need to think about how to manage increased volumes despite flat margins,” said Mr. Swanson. “There will be more demand for emergency departments and inpatient care, and the ability of hospitals to manage patient throughput will be increasingly important.”
Patient volume in September increased year over year, with 4% more discharges per calendar day on average. The number of discharges per day increased 9% over 2022 in September and the average ED visits were up 6%. However, length of stay is dropping.
